Colombia: new rules to monitor and penalise misuse of intermediation agreements
On 9 May 2018, the Ministry of Labor issued Resolution 2021 establishing guidelines on inspection, surveillance and control of the enforcement of Article 63 of Law 1429 of 2010 (the ‘Resolution’).
Article 63 was enacted to tackle the misuse of the system of workers’ associations in Colombia known as ‘Cooperativos de Trabajo Asociado’ (‘CTAs’) and ‘Pre-Cooperatives’ (which fulfil the same functions as CTAs but are time limited and usually smaller). A number of employers in Colombia choose to contract with CTAs to avoid entering into direct employment relationships with their employees. Workers employed through CTAs have limited employment rights and often experience poorer working conditions than direct employees. Article 63 prohibits employers from using CTAs as intermediaries to employ workers to perform duties that are part of the core business function of the organisation. More broadly, it prohibits any mode of labour intermediation that affects the constitutional and legal rights of employees.
In the Resolution, the Ministry of Labor defines labour intermediation. It also establishes that the Regional Headquarters in charge of the Inspection, Surveillance and Control will be responsible for imposing sanctions on companies that use CTAs or Pre-Cooperatives to employ workers illegally, or make use of any other mode of illegal labour intermediation that affects the constitutional and legal rights of employees.
Under the regulation, the Ministry has determined that the Regional Inspection Headquarters must identify any labour intermediation agreements with third parties used by employers. Where they finds that these types of agreements have been executed with independent services contractors, they will analyse, among other elements, the following to establish whether the arrangement constitutes illegal intermediation:
- If the contractor’s employee performs the same or substantially the same duties as the ones performed by the contracting party’s employees and what kind of duties they undertake within the contracting party’s business (whether they are part of the organisation’s core business function).
- If the contractor’s current employees have been employees of the contracting party or of any other contractor that the contracting party has used.
- If the contractor has autonomy in the execution of the processes or sub-processes which the contractor’s workers are engaged to undertake.
- If the contractor exercises control and disciplinary authority over its employees or, if on the contrary, this function is performed by the contracting party.
- If the contractor and the contracting party engage in behaviour that violates the principles and rules governing their employment relationship.
The Resolution also sets out the situations where engaging with temporary employment agencies, CTAs and Pre-Cooperatives and independent contractors, or entering into union agreements and providing placement services will constitute illegal labour intermediation.
Organisations found to be in breach of the provisions of Article 63 are liable to fines of between USD 200,000 and USD 500,000 (theoretically, fines can be up to a legal maximum of 5000 times the minimum monthly statutory salary, approximately USD 1.3 million, but no fine of this level has been imposed). The level of the fine will depend on the size of the organisation and the number of employees involved in the illegal intermediation scheme.